nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2015‒12‒12
three papers chosen by
Joseph Marchand
University of Alberta

  1. Since you’re so rich, you must be really smart”: Talent and the Finance Wage Premium By Böhm, Michael; Metzger, Daniel; Strömberg, Per
  2. Cyclical and market determinants of involuntary part-time employment By Valletta, Robert G.; Bengali, Leila; van der List, Catherine
  3. The strength of the weakest link: sickness absence, internal substitutability and worker-firm matching By Hensvik, Lena; Rosenqvist, Olof

  1. By: Böhm, Michael (University of Bonn); Metzger, Daniel (Stockholm School of Economics); Strömberg, Per (SIFR)
    Abstract: Relative pay in the financial sector has experienced an extraordinary increase over the last few decades. A proposed explanation for this pattern has been that the demand for skilled workers in finance has risen more than in other sectors. We use Swedish administrative data, which include detailed cognitive and non-cognitive test scores as well as performance in high-school and university, to examine the implications of this hypothesis for talent allocation and relative wages in the financial sector. We find no evidence that the selection of talent into finance increased or improved, neither on average nor at the top of the talent distribution. A changing composition of talent or their returns cannot account for the surge in the finance wage premium. These findings alleviate concerns about a “brain drain” into finance at the expense of other sectors, but they also suggest that rents in finance are high, increasing, and largely unexplained.
    Keywords: Finance wage premium; talent allocation; wage inequality
    JEL: G20 J31 M52
    Date: 2015–11–01
  2. By: Valletta, Robert G. (Federal Reserve Bank of San Francisco); Bengali, Leila (Yale University); van der List, Catherine (Federal Reserve Bank of San Francisco)
    Abstract: We examine the determinants of involuntary part-time employment, focusing on variation associated with the business cycle and variation attributable to more persistent structural features of the labor market. Our theoretical framework distinguishes between workers’ decision to seek part-time work and employer demand for part-time work hours, emphasizing demand and supply determinants of involuntary part-time work such as workplace technology, labor costs, and workforce demographics. We conduct regression analyses using state-level panel and individual data for the years 2003-2014. The results show that the combination of cyclical variation and the influence of market-level factors can explain virtually all of the variation in the aggregate incidence of involuntary part-time employment since the Great Recession.
    JEL: J22 J23
    Date: 2015–12–02
  3. By: Hensvik, Lena (IFAU - Institute for Evaluation of Labour Market and Education Policy); Rosenqvist, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: We study how employee sickness absence affects worker-firm matching. We build on the idea that firms are sensitive to absence in jobs with few substitutes (unique positions). Consistent with this, we show that unique employees are less absent conditional on individual characteristics, establishment fixed effects and detailed occupational information. Half of this association is explained by sorting of low-absence workers into unique positions but sorting is less pronounced under imperfect information. Finally, job separations respond more to realized sickness absence in unique positions. The findings suggest that the cost of production disruptions is an important aspect of firms’ hiring choices.
    Keywords: Sickness absence; production disruption; coworker substitutes; hiring strategies
    JEL: J23 J24 L23 M51
    Date: 2015–11–23

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